The so-called home swing, also known as the “Sylter model” is an interesting design for the tax-free transfer of assets between spouses and cohabiting partners. It is especially important for high-net-worth individuals who want to transfer cash to their spouse. Because in the “working shell”, for example for GmbH shares, the tax exemptions for operating assets can usually be used more skillfully.

The home swing leads to a tax-free transfer of assets by transferring the self-inhabited home back and forth. The core of the design is § 13 (1) number 4a ErbStG, because this provision allows a tax-neutral transfer of so-called family homes.

1st case: spouses want to transfer assets among themselves

The home swing requires a certain starting case, because only in this constellation are the conditions for a tax exemption fulfilled:

Spouse A wants to transfer assets to his spouse B. A is owned by the common single-family house and has considerable cash assets at the same time.

Suppose A has cash assets of EUR 2.000.000. He wants to transfer this to his wife, but does not trigger a gift tax. It would be incurred in the case of a “direct donation”, since only the allowance of EUR 500,000 is deducted from the enrichment in total. There remain EUR 1,500,000, on which the tax office sets gift tax.

This is where the home swing comes into play. The spouses make clever use of the fact that A is simultaneously in possession of the common single-family house.

2. The home swing in practice

According to § 13 (1) no. 4a ErbStG, grants among living persons are tax-free if one spouse provides the other spouse with property or joint ownership of a family home. ‘family home’ means any property including condominiums in which an apartment is maintained and used for its own residential purposes. The property must lie civilly with the transferred spouse, but can also be distributed between both (fraction property).

If we apply the norm to our example in the first paragraph, A can transfer his wife no cash, but the shared house tax-free.

However, the spouses have not yet reached the goal. Because now B is in possession of the property, but in fact it should receive part of the cash assets of A.

Therefore, B sells the property to A and sets a purchase price that would also be achievable on the free market. Thus, there is no donation within the meaning of § 7 (1) no. 1 ErbStG. A pays the purchase price to B, whereby A is back in possession of the home. At the same time, the cash assets – as desired by the spouses – were transferred tax-neutrally to B. None of these transactions triggers real estate transfer tax, since corresponding transfers between spouses are also excluded from taxation here.

Attention: “Shame period” in the case of home swings must be observed!

The home swing is a design model recognized in practice and jurisprudence, but still requires detailed planning. In particular, the following points should be noted: